Former Optus executive Paul Fletcher's book "Wired Brown Land? Telstra's Battle for Broadband" details the history of broadband communication in our nation and highlights why it is impossible that Telstra will give up in its fight for dominance, despite the wounds it has recently taken.
commentary Former Optus executive Paul Fletcher's book Wired
Brown Land? Telstra's Battle for Broadband details the history
of broadband communication in our nation and highlights why it is
impossible that Telstra will give up in its fight for dominance,
despite the wounds it has recently taken.
Paul Fletcher's Wired Brown Land? Telstra's Battle for Broadband (Credit: UNSW Press)
Fletcher has worked as the director of corporate and regulatory
affairs at Optus and before that, as telecommunications advisor and
chief of staff to former Communications Minister Richard Alston.
Naturally given the Optus connection, his opinions in a book almost
solely about Telstra have to be weighed carefully.
From his first chapter, entitled Creating a monster — and
trying to tame it, he explains how it was that the Australian
government formed an entity with such powerful market dominance and
how regulations introduced to cage its raw energy didn't work,
because they assumed that the dominant player would willingly come
to the table to negotiate access terms, something that made no
sense for it to do.
I do agree with him on this point. Any company that is trying
to make a profit will always try and escape any efforts to tame its
profit potential, however detrimental that potential is to the
national interest — something Fletcher doesn't blame Telstra for,
although he did take the time to lay a couple of solid blows below
the belt at chief rival and departed Trujillo amigo Phil Burgess.
Given this fact, Fletcher pushes the importance of market
structure rather than technology to create a workable background
for competition, something that made him look askance at the
Telstra offers to build a national broadband network, as long as
certain market conditions were met.
Fletcher knew that the government would have a hard road ahead
of it, most likely facing legal action and needing to wield the
legislative stick, but he believed it was the right decision. He
also believed that decision would force Telstra to a new tack.
"The rational course of action for Trujillo's replacement will
be to recognise that the government is determined to impose change,
and to negotiate cooperatively to secure the best possible outcome
for Telstra," he said. He thought that if Telstra continued its
path of destruction, it risked too much. "Ultimately I think
Telstra will recognise the risk it faces and back down," he
said.
Yet to me, this contradicts what he has said throughout his book
that Telstra, logically, looks out for Telstra. Not long after the
announcement it had been thrown out of the former NBN process,
Telstra announced it was upgrading its HFC cable, giving a
spectacular middle finger to the government. Telstra's many public
speeches after it was unceremoniously abandoned by the wayside were
unapologetic for the company's stance. Its message: we can do well
without the NBN. Telstra was still ready to fight.
The announcement on 7 April that the government was doing
the equivalent of throwing the monopoly board up into the air and
starting again with fibre-to-the-home did change the dynamics,
however. It unfortunately came after Fletcher's book; those looking
for pearls of wisdom on this topic won't find them between its
covers.
If Fletcher's book said one thing ... was that no matter what altruistic ideas many might have about making Australia a digital hub, when the government is involved, politics can distort that notion to fit its needs.
Telstra became suddenly quite docile in its public statements, leading people to believe that the threatened stick of separation and HFC cable divestiture and the carrot of being able to participate
in the government's network after all had achieved a complete
turnaround in the company's approach.
Reports have intimated that Telstra is ashamed of its lack of
progress under outgoing CEO Trujillo, and will return to a CEO who
will play nicely with the government and competitors like Ziggy
Switkowski did.
Yet Fletcher himself says that despite the outward appearance of
very different approaches to leadership, Telstra's management has
always followed the same path. "Trujillo and his colleagues have
been more aggressive in their rhetoric — but in his ruthless
exploitation of Telstra's market power Trujillo has followed
fundamentally the same approach as his two predecessors."
Why should it change now? Telstra will still be looking out for
Telstra and if it doesn't why is the board making such an illogical
choice of CEO?
Which makes the next few months very important. Will the
government stick to its guns on the regulatory changes? Will
political pressures impinge to make the government strike
compromises with Telstra as its predecessors have been tempted to
do in the past?
If Fletcher's book said one thing, even if he didn't mean
it, was that no matter what altruistic ideas many might have
about making Australia a digital hub, when the government is
involved, politics can distort that notion to fit its needs.
It was politically expedient to create Telstra, create a broadband network policy, and now to have some progress on that network. Time is an important issue in politics and Labor's time has been running
through its hourglass since November 2007.
When contacted about what he thought of the new network,
Fletcher said that it was difficult to say at this point how
realistic the policy was until the details of the implementation
study were revealed. However, he did admit that despite the
government's proposal to separate Telstra, the old monster had some
power yet.
"We can certainly expect there's going to be some very
substantial arm wrestling," Fletcher said. "It's taken a blow
— there's no doubt about it — but it's also a very
powerful, well resourced company."
So show us your guns Conroy. Hope they're up to it.
Fletcher's book, published by UNSW
Press, will be launched this evening.